Each year, taxpayers are expected to file their returns and pay their taxes, knowing that if they fail to do so, they could face hefty penalties and fines. Let’s say you are an honest taxpayer and one year you don’t pay your taxes. This could have happened for a variety of reasons such as major disasters or IRS error. You may be surprised to know that a program exists that helps taxpayers who find themselves in one of these unfortunate situations. Enter: First-time Abatement.
First-time Abatement (FTA) is an IRS penalty waiver program that offers the option to receive penalty relief to taxpayers during a single tax period. The taxpayer has either failed to file their returns (FTF), failed to pay (FTP) their taxes due, or failed to make a deposit on an installment program (FTD), and is now being fined (potentially significantly). In order to receive the waiver, the taxpayer must demonstrate full compliance for the past three years, and, according to an April 2013 update, must be current with filing and payment requirements. The program provides a way for well-meaning taxpayers who make a mistake for the first time to avoid penalties.